Callum Keown

JetBlue Airways has been fined $2 million for "chronic flight delays" and unrealistic scheduling by the Department of Transportation in a landmark moment for the aviation industry.

It's great news for consumers, with half of the penalty being used to compensate passengers. But it's far from ideal for airlines, which face having to amend or reduce capacity in places to avoid paying fines.

The amount itself is just a drop in the ocean -- JetBlue has posted revenue of $2.2 billion to $2.6 billion in each of the last 10 quarters. But it's a clear sign that the DOT won't tolerate repeated flight delays.

Notably, the DOT said it has "ongoing investigations into other airlines for unrealistic flight schedules," in a press release Friday.

Airline stocks fell in early trading Friday: JetBlue was down 2.6%, American Airlines Group slipped 2.8%, Delta Air Lines was 2.7% lower and United Airlines Holdings fell 2.2%.

It's the first fine of its kind, the DOT said. "Today's action puts the airline industry on notice that we expect their flight schedules to reflect reality," said U.S. Transportation Secretary Pete Buttigieg.

"The department will enforce the law against airlines with chronic delays or unrealistic scheduling practices in order to protect healthy competition and ensure passengers are treated fairly," he added.

The agency defines a chronically delayed flight as one which is flown at least 10 times a month, and arrives more than 30 minutes late 50% of the time or more -- it also counts cancellations. Its investigation into JetBlue found that the carrier operated four such flights 145 times from June 2022 through November 2023. Each flight was chronically delayed for five consecutive months, or more, the DOT found.

There are many possible reasons a flight can be delayed, including weather or even air-traffic-control shortages. The DOT said that JetBlue was responsible for 70% of the investigated delays based on Bureau of Transportation Statistics data.

"While we've reached a settlement to resolve this matter regarding four flights in 2022 and 2023, we believe accountability for reliable air travel equally lies with the U.S. government, which operates our nation's air-traffic control system," JetBlue said in an emailed statement to Barron's.

Write to Callum Keown at callum.keown@dowjones.com

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January 03, 2025 11:00 ET (16:00 GMT)

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